Angola VAT system introduction

Non-resident digital service providers will have to comply with the new Angola VAT system from their very first sale. New rules introduced on July 1, 2019.

May 23, 2019

Angola VAT becomes a reality on July 1, 2019, meaning further complexity for digital businesses selling globally.

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The Angolan parliament, in a historic vote, passed the introduction of the new VAT code in February 2019 by a margin of 166 votes for, none against, and one abstention.

Angola VAT: No transitional period available for non-resident suppliers

A threshold of USD$250,000 applies only to local companies, as does a transitional period that has previously been flagged in reports. This transitional period does not apply to non-resident digital service suppliers which means in effect that there is a zero threshold for non-resident digital service providers.

The Angola VAT rate is 14%, this is one percentage point lower than that of the South African Development Community (SADC) average. The new VAT system will replace Angola’s Consumption Tax code.

Potential for customer location determination issues

It is difficult to pay in foreign currencies in Angola using locally issued cards. In some cases, Angolan-based customers use credit cards issued by Portuguese (or some other country’s) banks to pay for online goods and services. This may affect customer location determination.

Determining the customer’s end location (via IP address, credit card billing address, etc) is an important feature of many VAT/GST implementations globally specifically in relation to cross-border digital sales. As a result, this purchasing trend may impact the expected volume of sales recognised as being from Angola.

B2B sales exemption

When non-resident service providers do not appoint a local tax representative the reverse charge mechanism will be applied by the local business. It is still unclear as to how the validation of business status will be achieved. It is possible that a type of company identification number validation system will become available online via the Angolan tax authority website.

Angola VAT registration

Those non-resident digital service suppliers that want to register for Angola VAT will need to appoint a local fiscal representative. The law in its current form also refers to a simplified registration system for non-resident digital service suppliers, however, the explanatory regulations have not been published yet.

Remember, here at Taxamo, we will update our Insights section when we obtain more information on what is planned around the introduction of VAT in Angola.

Taxamo content is created for guidance only, please consult your local tax advisor.

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